PH SHARES WEEKLY OUTLOOK

Early gains to reverse on Thursday’s Brexit vote

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Stock market investors are likely to buy shares during the initial days of this week’s trading and later reverse their positions to book profits ahead Brexit poll. The result of the poll may trigger uncertainty in the global financial markets including that of the Philippines, analysts said.

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Victor Immanuel Felix, equity research analyst at AB Capital Securities Inc. said that share prices are expected to further recover today (Monday) and Tuesday ahead of the Brexit referendum on Thursday June 23.

The main index would then likely sag on Wednesday and Thursday where the poll results would determine whether the United Kingdom (UK) would withdraw its membership in the European Union (EU).

“Although insofar as the US rate hike is concerned there are no more uncertainties at least until the end of August, there is Brexit. I expect a lot of investors to buy on Monday and Tuesday, then profit taking on Wednesday and Thursday because of the uncertainty brought about by Brexit. Therefore, investors would be risk averse,” Felix said.

Felix added that a stronger main index on the first two days of the week is highly possible even though local share prices are still deemed to be more expensive compared with regional peers.

“Our PE [price-earnings ratio] is still a bit expensive, but a rally on the local bourse on Monday and Tuesday is still possible,” he explained.

For the week, the trading range could be between 7,400 and 7,600, Felix suggested.

Lastly, he said that the eight-point economic agenda of the Duterte administration, whose economic team will hold a two-day consultation meeting with some 300 business leaders in Davao City starting today (Monday) would likewise have an impact on the main index’s movement.

The benchmark Philippine Stock Exchange Index (PSEi), closed last week at 7,622.07, level or 1.49 percent increase week-on-week, even though it incurred substantial losses during the early part of the week.

Average value turn over for the week was 15 percent lower than the previous week at P6.9 billion, with losers outnumbering winners, 88 to 97.

Net foreign buying was low at P97 million.

“Uncertainty rises this week as a string of polls showed support for Brexit, thus increasing the chance of UK exiting the EU,” 2TradeAsia.com said in a note sent to reporters.

It further said that as the referendum takes on June 23, investors might wait on the sidelines and take cue from the referendum results the day after.

“An exit result might trigger an immediate market reaction and uncertainty in financial markets is likely to be seen,” 2TradeAsia.com said.

The online brokerage also suggested that Duterte’s eight point economic agenda being well received by the investors may have served as a catalyst for the reversal in PSEi’s downtrend prior to the elections.

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